The makeover goes live in either July or August of this year and will allow users to view or edit sent documents using web versions of its Office software.

This will allow users to preview and collaborate on documents in real-time, while saving them in the cloud.

Gmail, Google’s popular free email service, already allows its users to do this through its web based set of tools, such as Google documents, which offer similar functionality to the traditional non-cloud-based Microsoft Office suite.

Key changes to Hotmail's refreshed look include the addition of ‘Active View’ which is a new function that allows Hotmail users to preview photo attachments and view them as a slide show with a single click.

There will also be the capability to watch videos, which have been sent using links, to a site such as YouTube, without leaving the inbox.

One-click filtering, which sits under a new tab called ‘View’, will allow Hotmail users to see their inbox in different ways – either to show messages only received by a user’s contacts, or only unread messages.

Bing, Microsoft’s search engine, has been integrated further into the email experience, with a new “from Bing” feature which lets users search for images, videos, or any other content which they may wish to share, and embed the material into an email with one click.

Microsoft has also promised additional capabilities such as enhanced account protection and increased storage levels.

Walt Harp, one of Windows Live’s directors said that the makeover was to help Hotmail users to become better equipped to deal with the huge amounts of information flowing through their inboxes on a daily basis.